27 Nov Fixed Income Perspectives – “For Your Eyes Only”
Voya Investment Management – Fixed Income Perspectives – November 2015
While diamonds are forever, zero interest rate policy (ZIRP) in the U.S. appears to be coming to an end. Most agree a federal funds rate hike is likely at the December 15–16 FOMC meeting, though the spectre of higher short-term interest rates has some market participants uneasy and has left futures markets short of 100% consensus on a hike. Although the Federal Reserve has a license to kill easy money policy at the time of its choosing, FOMC members are explaining the move off ZIRP as a step toward “normalisation” of interest rates rather than an outright tightening; moving rates higher serves to reload the Fed’s golden gun of monetary policy, the story goes, and provides it with some needed ammunition should the economy again slow.